Tuesday, November 07, 2006

Outsourcing: No Pain only Gain

A write-up at The inquirer says that "Outsourcing does not save money" but

Even if you look up the meaning of the term, ‘Outsourcing’ in any dictionary it reads something as follows-

“Getting work done by outside suppliers in order to cut-costs”

Outsourcing is everywhere represented as a cost-cutting strategy implemented primarily for monetary gains. Though there is much more to the concept of outsourcing, one thing is for sure. Outsourcing saves money! Simply put, rather than employing their own full- time plumber, or an accountant for that matter, a company can procure the services of an independent professional, whenever the need arises, benefiting from the experience and reducing the long-standing costs of hiring, employee benefits, office space and retirement.

Through Outsourcing, global corporations tap into a young, well-trained, usually English-speaking workforce that earns about 20 or 30 percent of the wages garnered by a comparable U.S. worker. The money saved is a big boost to the U.S. economy. Furthermore, sending jobs overseas increases the productivity, profitability and the competitiveness of U.S. companies. Thomas Friedman, the ‘New York Times’ columnist, in his work titled, ‘The World is Flat’, sees Outsourcing driving U.S. economy to a new level. The profit is cut out in cheaper goods, global development, international security enhanced by linked economies and capital that is freed to do more sophisticated work.

The question arises-

Should the international trade in services be restricted?

The anxiety of Job-loss with in the U.S. to offshore locations is understandable though misguided. The aim is not, and has never been to leave the U.S. workforce unemployed. On the contrary, the constant endeavor has been to free them of work that can be done efficiently at a much lower cost, thereby increasing productivity. The strategic motivation behind outsourcing is to focus on core competencies or freeing internal staff for other initiatives. On a state level, it has been seen repeatedly that attempts to contain and save jobs by passing anti-outsourcing bills has only led to additional costs to the state exchequer. Such a ban would drive up the cost of services and take money away from other programs in the budget. What is often overlooked in this debate is that the consumers are, after all, being provided with the services they demand at a much lower cost and more importantly, when more money is saved by U.S. through outsourcing, there is more for education, job-training and tax-relief.

Outsourcing, in contrary to posing a threat to employment with in the U.S., can actually help preserve existing jobs and create new ones. A new analysis commissioned by the California Legislature confirms the same. The study claims shipping jobs overseas is not only good for the economy, but for workers as well. Offshoring is bound to increase productivity. Thus the overall, long-run effect may be to increase living standards in U.S.

That's not a mere theoretical ranting. There are numbers to prove this view. The available data suggests that the number of jobs being offshored is small relative both to the overall labor market and to the number of people working in the relevant at risk-occupations.

Therefore, Outsourcing is not only a cost-cutting measure but a work solution. It’s not an adversary ready to pounce at your job, but a friend in disguise. There may be misunderstandings, but like a good friend Outsourcing will bring you no pain, only lots of gain!

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